Dubai residential prices continue to fall

The index from Landmark Advisory shows that apartment prices fell 17% and the prices of villas fell further, at 24%, in the second quarter of this year.

The demand for villas is on the increase as they are now seen as representing good value for money. The report indicates that villas made up approximately 73% of all residential sales in the quarter.

In the leasing market, landlords in Dubai have temporarily raised rents by withholding properties from the leasing market. Landmark have expressed that this will only extend an inevitable decline.

Landmark analysts have also said that high borrowing costs and disjointed lending practices are still having an adverse effect on the Dubai property market. The supply demand gap is expected to continue to grow and analysts are warning that the office market in particular is facing a massive over supply situation.

'Poor planning has created a supply glut that will take many years to resolve. The economic downturn is only part of the problem,' they said.

Landmark also reported that in Abu Dhabi, sales prices fell by up to 1% for apartments in the second quarter and 8% for villas compared with the previous quarter, but prices are unlikely to suffer further significant declines.